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SECTOR OVERVIEW
Sector Change MTD YTD Valuation Last 12- P/E Ratio
MReturn
Basic Industries -1.69% -6.10% -6.07% 4.22% overvalued 74.81% 25.57
Capital Goods -1.51% -1.60% -1.60% 3.57% overvalued 40.54% 22.61
Consumer Durables -0.97% -1.60% -1.60% 8.37% overvalued 71.57% 21.38
Consumer Non-Durables 0.11% -1.86% -1.89% 0.84% overvalued 59.67% 18.6
Consumer Services -0.74% -1.72% -1.72% 3.90% undervalued 62.27% 21.95
Energy -0.94% -3.98% -3.98% 7.82% overvalued 58.41% 21.34
Finance -0.53% 0.55% 0.55% 1.10% undervalued 24.95% 17.9
Health Care -1.22% -3.15% -3.15% 9.36% undervalued 52.18% 20.38
Public Utilities -0.69% -4.47% -4.47% 0.33% undervalued 28.36% 16.88
Technology -1.01% -1.81% -1.81% 8.74% undervalued 64.09% 25.32
Transportation -1.51% -3.55% -3.55% 0.93% undervalued 32.97% 20.19
Index Talk--The DJIA
A rough week for the markets is currently being tempered by positive reaction to the
latest US GDP figures. Preliminary reports indicate that the US economy grew at a rate of
5.7% for Q4 2009. This marks the second quarter in a row for positive GDP growth and the
figure beats analyst expectations of 4.8%. Still, for all of 2009, GDP actually fell by 2.4%--
which according to the WSJ was the largest drop since 1946.
It remains to be seen if this growth is representative of those "green shoots" we heard
so much about a few months ago. Analysts note that the boost in GDP was driven by a
slower drawdown in business inventories rather than consumers--who will have to be the
main driver of a strong recovery. It also remains to be seen if this latest news will break the
markets out of their funk. As noted below, VE Chief Market Strategist Richard Suttmeier
believes that the markets have suffered some key reversals.
Below, we provide our critical VE datapoints for the Dow Jones Industrial Average.
Last 12- Forecast Forecast
Mkt Valuation VE P/E
Ticker Name M 1-Month 1-Yr Industry
Price (%) Rating Ratio
Retn(%) Retn(%) Retn(%)
NONFERROUS
AA ALCOA INC. 12.92 -8.95 3 52 1.24 -10.54 N/A
BASE METALS
AMERICAN EXPRESS FINANCIAL
AXP 37.43 -36.39 5 116.23 0.45 15.17 24.31
COMPANY SERVICES
BA BOEING COMPANY 62.56 1.04 3 50.31 -0.29 -4.93 34.19 DEFENSE
BAC BANK OF AMERICA CORP 15.37 99.12 3 109.12 -2.59 -7.22 N/A BANKING
CATERPILLAR
CAT 51.86 5.11 4 63.44 -0.13 -1.5 24.01 MACHINERY
INCORPORATED
OFFICE/COMM
CSCO CISCO SYS INC 22.52 -13.72 4 33.41 -0.09 -2.58 17.19
EQUIP
CVX CHEVRON CORP 73.24 -15.68 4 3.05 1.59 8.53 14.63 OIL
EI DU PONT DE NEMOURS
DD 32.32 -3.26 4 38.42 0.49 -2.57 15.84 CHEMICALS
& CO
DIS WALT DISNEY COMPANY 29.35 2.92 3 33.23 -0.09 -7.97 16.31 LEISURE
MULTI-IND CAP
GE GENERAL ELECTRIC CO 16.16 -1.44 4 25.76 0.17 -1.31 15.84
GOOD
RETAILING -
HD HOME DEPOT INC 27.34 9.07 3 23.49 -0.18 -9.2 17.45
GOODS
HPQ HEWLETT PACKARD CO 47.79 2.69 4 28.81 0.1 -1.06 12.19 COMPUTER MFRS
INTERNATIONAL
IBM 123.75 -1.7 4 33.12 0.11 -0.54 12.51 COMPUTER MFRS
BUSINESS MACHINES
SEMICONDUCTORS
INTC INTEL CORPORATION 19.92 -18.65 4 47.01 -0.16 -4.22 25.87
COMPONENT
JNJ JOHNSON & JOHNSON 63.8 1.73 4 12.6 -0.08 0.69 13.78 DRUGS
JPM JPMORGAN CHASE & CO. 39.48 -0.37 3 43.56 -0.7 -5.85 18.76 BANKING
FOOD
KFT KRAFT FOODS, INC. 28.04 -12.56 4 -0.71 0.12 -1.59 14
PROCESSORS
KO COCA-COLA CO 54.18 5.41 3 27.84 0.01 -1.9 17.73 BEVERAGES
Ticker Name Mkt Valuation VE Last 12- Forecast Forecast P/E Industry
Price (%) Rating M 1-Month 1-Yr Ratio
Retn(%) Retn(%) Retn(%)
MCD MCDONALDS CORP 62.83 -0.87 3 9.9 -0.21 -6.3 15.79 RETAILING - FOODS
UNDESIGNATED
MMM 3M CO 80.75 7.67 3 50.62 -0.17 -6.43 17.6
CONR SVC
MRK MERCK & CO INC 37.97 -3.23 4 39.08 -0.13 0.06 11.69 DRUGS
SOFTWARE AND
MSFT MICROSOFT CORP 29.16 10.36 4 65.4 -0.3 -3.61 16.76
EDP SERVICES
PFE PFIZER INC 18.63 -15.02 4 27.08 0.26 1.04 9.17 DRUGS
PG PROCTER & GAMBLE CO 61.68 10.56 3 9.38 -0.25 -3.32 14.95 HOME PRODUCTS
TELEPHONE
T AT&T INC 25.54 -8.98 4 4.93 0.09 0.76 12.04
UTILITIES
TRV TRAVELERS COS INC 50.27 3.3 3 25.39 -0.65 -14.15 7.95 INSURANCE
UNITED TECHNOLOGIES MULTI-IND CAP
UTX 67.37 1.6 4 36.76 -0.08 -2.86 16.35
CP GOOD
VERIZON TELEPHONE
VZ 29.33 -11.78 4 0.72 0.08 0.4 12.22
COMMUNICATION UTILITIES
RETAILING -
WMT WAL-MART STORES INC 52.61 4.42 3 10.32 -0.12 -6.29 14.7
GOODS
XOM EXXON MOBIL CORP 64.96 -19.61 4 -16.14 1.69 11.72 16.52 OIL
* Remember that rankings are determined by momentum (LTM), valuation, market cap, forecast, and P/E
Ratio so high figures overall may be enough to overcome weak performance in other categories--for
example, with good LTM, valuation, and size, a given equity may be predicted to outperform the overall
market despite a negative short or long-term forecast.
Suttmeier Says
--Commentary and Analysis from Chief Market Strategist Richard
Suttmeier
Major Indices
Last week we saw weekly Key Reversals for the Dow and S&P
500, which continue with lower weekly closes this week and next with
the Dow below 10,173 and the S&P 500 below 1115.1.
The weekly chart for the Dow Industrial Average is now negative with the Ascending
Wedge that goes back to March 5th broken to the downside and below the down trend that
goes back to October 2007. Even if the key reversals are not confirmed, today’s support is
10,004 with my annual pivot-- now a resistance at 10,379. We have had the breakout
followed by the fake-out-- as I predicted.
Chart Courtesy of Thomson / Reuters
Commodities
Nymex Crude Oil has a negative weekly chart profile with Texas Tea below its 200-
week simple moving average at $76.20. Quarterly support is $67.22 with my annual pivot,
now a resistance at $77.05.
Housing
We have updated the FDIC Report to include the latest VE datapoints on all problem
banks as well as Suttmeier's latest predictions for the US banking system and economy.
There are currently 759 publicly traded FDIC insured financial institutions
overexposed to CD Loans or Nonfarm Non-Residential Real Estate loans as per the
FDIC's own guidelines.
As of January 8, 2010, there were 221 banks overexposed to C&D and/or CRE loans in the
ValuEngine database with full data coverage. Of these overexposed banks, 82 were rated “1-
Engine” Strong Sells, 73 were rated “2-Engine” Sells—all of which are predicted to under
perform the markets as a whole, 63 were rated “3-Engine” Holds—which are predicted to
roughly match the overall market, 3 were rated a “4-Engine” Buy, and none held our highest
rating of “5-Engine” Strong Buy—with the 4 and 5-Engine stocks predicted to out perform the
overall market.
This means that there are currently 155 banks rated Sell or Strong Sell that are also
overexposed to C&D and/or CRE loans.
There are 198 overexposed institutions with only partial ValuEngine coverage and thus
those banks have no rating--these are included in the problem bank list.
There are 341 additional institutions carrying C&D and/or CRE loans in excess of the
FDIC guidelines that do not appear in the ValuEngine database. These are also listed in
the report following the VE List of Problem Banks.
For more on the ValuEngine Quarterly FDIC Report, Click the Image Below